Rethinking Unemployment

The New York Times has an interesting interactive map showing unemployment rates by county for the entire United States, using December 2008 data. Although the rates vary dramatically — Imperial County, California comes in at nearly 23% while Campbell County in Wyoming clocks at about 2% — much of the country hugs close to the average of 7.1%.
An unemployment rate of 7% is sobering, and it’s currently a bit higher. But part of the challenge with the current economic mess is that everyone is scared to spend… which simply makes the problem worse.

We have known for a long time that the polarity of how we frame things makes a big difference: a surgery characterized as having a 95% chance of success is more attractive to patients than the same surgery characterized as having a 5% chance of failure. And there’s sound evidence that suggests that the reason we react so strongly to losses is that outcomes framed that way engage our amygdala — one of the most primitive parts of our brains. (Fish have amygdala.)

So here’s a suggestion to the current administration: Start reporting employment rather than unemployment rates (or at least report both together). Thinking about a 92% employment rate might do a lot more to ease fear than focusing on an 8% unemployment rate.